It’s an enticing thought indeed the idea of being able to buy a new car on 0% finance. There are however certain pitfalls which need to be considered before making that commitment. This is plainly a pretty substantial financial step to be making and should of course not be made lightly.
Generally most 0% finance deals do not have the extended time period of payback as ‘normal’ car loans. As a result of this many prospective car buyers will opt for the more conventional interest loan method. The reason being that monthly payments will be kept at a lower and thus more manageable rate,even though they will end up paying considerably more in the greater scheme of things.
Having said this, 0 % is currently one of the most popular incentives that there is right now. To be fair 0% finance deals tend only to be available on limited stock models, and will often mean that premium models and special option packages are just not on the table.
Zero percent deals offered by dealerships are often just another plot to entice people into their showrooms thus creating more opportunity for sales. Some prospective buyers may take up the offer, some don’t, but the fact is that the enticement got them into the showroom in the first place.Many will then purchase the vehicle
without actually taking up the finance offer. Of course once the punter is in there this gives the sales person the chance to maybe sell different products such as after market products, insurances ect.
It is always a good idea to ensure prior to taking on a zero percent finance deal that you are actually getting a realistic trade value on the vehicle that you are buying.
It’s very easy to just get blinded by the enticement of not paying interest, and possibly overlooking the fact that the car that you are purchasing isn’t actually coming in at a good, competitive price. You should always compare your monthly repayments side by side, with the same deposit and terms to see which really is the more favourable deal.
There is of course another way of looking at a structured 0% finance deal, for this I will invent a scenario that will perhaps sell the deal.
Lets say you are purchasing this new car.You may have the option (if you are lucky) to pay the full price in cash,or, alternatively you may want to consider the 0% finance deal on offer. Now, many would say,this is a no brainer, if you have the cash to pay for it, do just that. What would be the point of getting laden with a monthly payment scheme. The answer is this. If you take on the zero percent monthly repayment option, you can keep the cash that you had to initially pay for the vehicle and place it in a high interest account. You could then presumably look at this as being ‘free money’ whilst you take your time leisurely paying off your
monthly repayments. You would then just simply set up your bank account to make the repayments being secure in the fact that payments are being made on time. Of course there could be a potential risk to this strategy, that is that if a payment were to be missed for whatever reason, the interest rate would then soar.
Always remember, even if you do qualify for the zero percent deal, you can save even more money by negotiating the vehicles final price, as well as taking advantage of any other additional offers that may be available. Always watch your bottom line, and don’t eave money on the table.